At the end of May, the domestic ABS market experienced a slight decline, with most grades experiencing a narrow downward adjustment in spot prices. According to the Commodity Market Analysis System of Shengyi Society, as of May 26th, the average price of ABS sample products was 10662.50 yuan/ton, with a price level increase or decrease of -0.58% compared to early May.
Fundamental analysis
Supply level: At the end of May, the load of the domestic ABS industry continued to decline, with the overall load level dropping from 67% in mid May to around 61% currently. The average weekly production has fallen back to 110000 tons, and although the inventory level of aggregation enterprises is still at a high level, it has been reduced to a certain extent, and the on-site supply is still at a relatively sufficient level. At the same time, the recent release of new equipment capacity by two companies still has a certain suppressive impact on the industry’s supply support, and there is still some supply pressure in the market. Overall, the supply side has shown some improvement in support for ABS spot prices.
Cost factor: At the end of May, the upstream three materials and one change of ABS showed strong performance in mid month, which began to weaken the support for ABS cost side. In terms of acrylonitrile, the initial spot resources are limited, and manufacturers continue to raise prices at high levels. However, as the domestic unit price continues to rise, the growth space of downstream demand limits the further increase of acrylonitrile. Although there is still no pressure on factory inventory, new production capacity will continue to be added in the long run, and overall supply is abundant, so the market is fluctuating downwards.
The domestic butadiene market price has significantly fallen recently. The downstream synthetic rubber futures market has weakened, with weak market demand, leading to a general weakening of the spot market mentality. In terms of supply and demand, the recent arrival of port cargo in the East China region has been good, and the overall market supply is relatively loose. Under the influence of multiple negative factors, the butadiene market has mainly operated weakly this week.
At the end of May, the domestic styrene market ended its upward trend, and prices fluctuated and fell back. The good news for raw material pure benzene has been exhausted, and the load of the equipment has increased. Coupled with the continuous high supply from South Korea, there is a greater pressure to reduce inventory, and the price center has shifted downwards. Secondly, the high inventory of styrene downstream and weak demand, coupled with the early completion of maintenance for some facilities, have further suppressed the rise in styrene prices due to increased supply. In the short term, the raw material pure benzene is weak and difficult to change, and it is expected that the styrene market will operate weakly in the short term.
On the demand side: In the early stage of the China US talks, both sides reached an agreement to reduce tariffs, which is beneficial for the commodity market and significantly boosts the export market in areas such as small household appliances and consumer electronics at the macro level. The export orders of ABS terminal factories rebounded rapidly, and the load also increased accordingly, leading to a surge in on-site trading volume. But with the gradual release of macroeconomic favorable factors, the liquidity of goods has cooled down, and the purchasing logic has shifted to stocking up on essential needs. In addition, the inventory position is relatively high in the middle of the month, and there is a large space for on-site disposal, so there is no tight situation on the supply side. Overall, the demand side has cooled down the support for the ABS market.
Future forecast
At the end of May, the domestic ABS market remained stagnant and decreased. The prices of upstream three materials have weakened, which has led to a decline in comprehensive support for ABS cost side. The production load of ABS polymerization plant continues to decrease, and the demand side heat is cooling down. Business analysts believe that the previous suspension of tariffs between China and the United States, as well as favorable export window periods, have contributed to a surge in spot prices in the middle of the month. However, as the market continues to heat up, businesses are returning to a cautious attitude. At the end of the month, under the dual pressure of cost and demand, it is expected that the ABS market will continue to consolidate and operate weakly.
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